Hindsight is 20-20 and the past often appears black and white. But for anyone living in the now, the future always appears to be a grey zone, where choices today may produce unexpected results tomorrow.

What's the reaction on Pennsylvania Avenue to this? Talk of "Bush Considers $800 Tax Rebate For Every Filer" dominates the news while rumors abound that Helicopter Ben and the Federal Reserve will throw caution to the winds and cut the prime rate by a full 100 basis points (a full 1%) either soon or at the next regular meeting at the end of January.

Why are they frightened? Ambac just lost their rating. What does this mean? There is a good chance, not certainty, but good chance that the next 180 days may see financial Armageddon for the entire planet. Right now the insurers for all this debt have been uncovered as bankrupt themselves. Ambac is just the leading edge of this second wave of the financial mess. If you don't understand what this means, then you need to try to educate yourself. But think of it this way - the insurers have certain ratings and they transfer their rating to a financial instrument in exchange for an insurance fee. In normal times when these financial instruments are properly valued and rated, they are properly insured and usually don't default anyway. But now everything is contracting. The insurers are broke and their ratings are being downgraded, which means every single dollar of debt they insured is going to drop in ratings as well, causing a cascading failure of revaluations across the board. So even the $3 trillion headline above is wrong. This could run into the tens or hundreds of trillions of do

In other words, we may be looking at the entire global dollar based fractional reserve banking system resetting to zero. To make matters worse, we are facing the early wave of effects from climate change plus the planetary cries from resource depletion. Like many others I thought we had a bit more time but the collapse of the insurers is going to shake the entire financial foundation. Note that the government may try, as a last ditch effort, to use its own "credit" as backing for the insurers. If this occurs, expect government debt to skyrocket, perhaps as high as 20% for the base rate and all other rates being somewhere above that. Such an attempt would collapse within weeks to months at best and perhaps days at worst. Such an action would be an admission of financial collapse.

We are talking about the potential end of the dollar as a currency. A dollar may shortly be as interesting as a Confederate note - historically interesting but worthless. And into that gaping chasm, the entire human race is running, while at the same time running out of core resources.

The Chinese are said to have a curse, "May you live in interesting times!" It certainly appears that these are going to be interesting times.